InvestorQ : What was the reason for so many IPOs listing at a discount during the last week? Was it bad market conditions?
ishika Banerjee made post

What was the reason for so many IPOs listing at a discount during the last week? Was it bad market conditions?

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4 months ago
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While it is hard to pinpoint reasons, I think there were two reasons for this underperformance. First was valuations. The entire attractiveness of an IPO is about leaving returns on the table for investors. Many of them are either loss making or trading richer than the priciest stocks in the industry. People are willing to accept loss making companies if the model is right. But that logic cannot be applied to all the businesses in India.

The second reason was the purpose of the IPO. Too many companies appear to be raising just because funds are available rather than because they need funds. Investors are impressed when fresh funds are raised for expansion and growth. Non-OFS component is being used for working capital and office expenses. In cases, the purpose to repay debt and it almost makes it look like equity is cheaper than debt to the companies in question.
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